Question - Prepare an income statement (ignoring income taxes) for Kissick Co.'s first year of operations and a balance sheet as of the end of the year. (Hint: You may find it helpful to prepare T-accounts for each account affected by the transactions.) (Amounts to be deducted and net loss should be indicated with minus sign.)
a. Issued 196,000 shares of $4-par-value common stock for $784,000 in cash.
b. Borrowed $520,000 from Oglesby National Bank and signed a 12% note due in two years.
c. Incurred and paid $400,000 in salaries for the year.
d. Purchased $680,000 of merchandise inventory on account during the year.
e. Sold inventory costing $580,000 for a total of $910,000, all on credit.
f. Paid rent of $110,000 on the sales facilities during the first 11 months of the year.
g. Purchased $180,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days.
h. Paid the entire $129,000 owed for store equipment, and $600,000 of the amount due to suppliers for credit purchases previously recorded.
i. Incurred and paid utilities expense of $36,000 during the year.
j. Collected $845,000 in cash from customers during the year for credit sales previously recorded.
k. At year-end, accrued $62,400 of interest on the note due to Oglesby National Bank.
l. At year-end, accrued $10,000 of past-due December rent on the sales facilities.